When you look at any given suburb there are always going to be the good end and the bad end.
When you think about somewhere in the Eastern Suburbs of Sydney the bad end of a suburb is still a great place to own property. However, if you’re serious about finding a high-quality investment that will outperform over a long period of time, it’s the ‘one-percenters’ – those small factors – that really matter the most.
In the current environment, we’re starting to see more listings hit the market in Sydney than we have for some time. That means as a buyer you’re starting to get more choice and you can use that to your advantage to really identify the pockets of a suburb that represent the very best investment opportunity.
In a beachside suburb, it’s clear that if a property has ocean views then it’s going to attract a premium price. There are only so many properties in a given location that are physically able to see the ocean and you can be sure that over time, these properties will not only demand a premium, but that premium will continue to increase as demand grows.
Similarly, it’s worth looking at streets in a suburb that are quieter and have less traffic running through them. We have to remember, that it is typically owner-occupiers who drive the demand for housing and set the prices in a given suburb or area.
Owner-occupiers buy homes for the lifestyle factors they offer. Most people want to be able to know they can take their kids for a walk and it’s a safe and quiet location. Similar factors are things like being in the right school zones or even being within walking distance to a ferry. These are small things that as a buyers agency we know owner-occupiers value incredibly highly.
It’s also worth considering the land itself a property is sitting on. If you’re buying a house a flat block is always going to be more in demand than one that is sloping. From the perspective of a homeowner, a flat block of land is far more usable and you can do a lot more with it.
However, a flat block of land will always have more demand from a development point of view. So if you were to look to build something new in the future or even sell to a developer, depending on whether or not that’s possible, you can bet a flat block is going to get a lot more interest and command a premium over a sloping block.
When we start putting all those factors together there are normally small pockets of a suburb that end up being in high demand and subsequently, properties in that location end up being very tightly held.
And over time the price disparity with those types of areas will also get bigger. People owning a property in a tightly held area don’t trade out of those locations as they would in a worse location, which also contributes to the upward pressure on prices.
Typically buying into a poorer location in a suburb is normally a way for a homebuyer to climb the property ladder. Whereas those high-demand pockets are normally where the homebuyer wants to end up.
Therefore demand will always exceed supply in those parts of the suburbs on those particular streets, which means prices will continually rise.
Owner-occupiers always want to be in that more premium part of the suburb and will do whatever they can to get there. People often forget that important fact when they look at investing and will be happy to just buy into a certain suburb.
But as we’ve seen, not all parts of a suburb are created equal and it’s why it’s possible to buy properties that will outperform the average.
When the opportunity presents itself be on the lookout for these in-demand pockets within a given suburb. Because they turnover so infrequently, when one comes along and you’re ready to buy, it could be a great chance to lock down a very high-quality asset.